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TRAI On 3G Spectrum Charges

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The Telecom Regulatory Authority of India (TRAI) had submitted recommendations to Department of Telecommunication (DoT) on “Allocation and pricing of spectrum fro 3G and BWA services”. Based on these Recommendations of Inter-ministerial committee DoT had sent the proposal to the Authority for its comments / recommendations.

The revised spectrum charges for 2G spectrum as proposed by DoT and endorsed by Authority is as follows: the new revised slab rates applicable to an operator with 2G spectrum should be applicable to the 2G + 3G spectrum holder on their total Adjusted Gross Revenue (AGR); stand alone 3G operator will pay 3% of AGR which corresponds to the lowest slab for 2G spectrum; 3G spectrum to be allocated based on auction shall not be counted for calculating the slab of the total spectrum holding by 2G licensee for levy of spectrum usage charges; the spectrum charge shall be payable on total AGR of 2G and 3G services taken together; and there will be moratorium of one year on the payment of annual spectrum charges for the stand alone 3G operator only. However, moratorium of one year will not be applicable to operators holding 2G +3G spectrum i.e. the existing licensees.

In this backdrop the Authority took a holistic view so as to address the following objectives: interest of consumer including affordability issues; just and fair allocation of spectrum; effecient usage of spectrum and also the financial viability of the licensees; fair revenue to the national exchequer.

The salient features of the recommendations are as follows: two percent (2%) of the highest bid amount should be charged as annual administrative charge during the validity period of 3G spectrum; as the operators will take time to roll-out their services after the allocation of spectrum, therefore the Authority recommended a moratorium of one year from the date of allocation of spectrum in respect of payment of administrative charge; the standalone 3G operator who does not have any allotment of 2G spectrum should also pay an annual spectrum charge of 3% of Annual AGR, which is equivalent to the lowest slab of 2G operator; all available spectrum in 2.1GHz including anticipated availability within the next one year should be put to auction so as to maximize the number of 3G service providers; the availability of 3G spectrum including anticipated should be put in public domain for the knowledge of bidders.

The Authority has emphasised that its recommendations are inexplicably inter-twined and the desired objectives can only be achieved if the recommendations are accepted in totality. The recommendations of the Authority is available at TRAI website www.trai.gov.in

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